Saturday, 28 August 2010

Economic growth explained

An experienced economist and a novice economist are walking down the road. They come across some dog shit lying on the pavement.

The experienced economist says, "If you eat that dog shit, I'll give you $20,000!"

The novice economist runs his optimization program and figures out he's better off eating it, so he does and collects the money.

Continuing along the same road they almost step into another pile of dog shit. The novice economist says, "Now, if you eat this shit I'll give you $20,000."

After evaluating the proposal, the experienced economist eats the shit and collects the money.

They go on. The novice economist wonders, "Listen, we both have the same amount of money we had before, but we both ate shit. I don't see us being better off."

The experienced economist retorts, "Not so! We've created $40,000 of trade!"


TinyBitGreen said...

but in reality, like a good capitalist, one of them would have borrowed the 20k and the only winner would be the banker who didnt have the social responsibility to clean up the dog shit in the first place.

Dave Gardner said...

I love it! Thanks for a good chuckle, even though it is so true it is sad.

Dave Gardner
Producing the documentary
Hooked on Growth